Earlier this year the USPS  Office of Inspector General released a white paper which explored how USPS could “offer a suite of non-bank financial services to help the financially underserved gain more financial stability and stay connected to the emerging digital economy”. The paper examined how the “Postal Service could partner with banks and other organizations to develop such services, which could help banks connect with new customers. The Postal Service already provides non-bank financial services like money orders and international money transfers, and many American families could benefit if the Postal Service expanded its offerings.” The paper explored the possibility of the Postal Service expanding its financial services offerings to meet the needs of the 68 million unbanked and underbanked adults who rely on alternative financial services such as check cashing and payday loans.

The OIG is now seeking to expand upon their research of implementing postal banking.

via Federal Business Opportunities

The OIG is now conducting follow up research that will look more closely at how the Postal Service could implement financial services. Specifically, the paper will assess a series of approaches (likely four to six) for a financial services expansion. Each approach should include a discussion of the types of products, partnerships, and delivery channels involved, as well as analysis of its viability and efficacy. The approaches will not necessarily be mutually exclusive, and the products involved will include alternative financial services like check cashing, money transfers, money orders, bill pay, prepaid cards, and mobile payment solutions. In laying out potential plans of action and analyzing the pros and cons of each one, the OIG aims to inform the Postal Service and other stakeholders as they consider how to move forward.

Approaches
• A partnership with a single financial institution.
• Partnerships with multiple financial institutions based on region or product.
• An expansion of currently allowable services, such as  money orders, and prepaid cards. Ancillary services could be added gradually.
• Creation of a secure platform that would allow the existing and potential customers of participating financial institutions to open accounts, purchase products, sign paperwork, and make deposits and loan payments at post offices. The supplier will then analyze each approach, using metrics that will include, but not be limited to the following:
Metrics
• What is the potential revenue opportunity?
• Costs – What are the key costs, including startup costs, capital requirements, administrative, personnel, compliance, etc.? Some of this may be qualitative.
• Operational complexity – How difficult would this be to execute? This should include a discussion of regulatory implications.
• Market size – What is the size of the market(s) in question? What is the trajectory of its growth or decline?
• Pricing options – To what degree would the Postal Service be able to offer products at prices that would both cover costs (at minimum) and save money for financially underserved Americans?
• Risks – What are the key risks and their magnitudes? How could they be managed?
• Timeframe – Approximately how quickly could the products and services be up and running? How long to maturity?
• Benefits to partners – How would the Postal Service’s partner(s) likely benefit? This should be both quantitative and qualitative.
• Benefits to the underserved – How would each approach meet the needs of financially underserved Americans? How much time and/or money could they save?

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